Major US banks have received an influx of account opening requests following the recent bank failures of Silicon Valley Bank and Signature Bank. Treasury Secretary Janet Yellen has assured the public that their deposits will be protected, but also noted that this may not set a precedent for future bank failures. She explained that uninsured deposits would only be covered in the case of significant economic and financial consequences.
Small tech companies, venture capital firms, and entrepreneurs with working money made up most of Silicon Valley Bank’s clients, with 94% of its assets being uninsured. As a result of these failures, Congress is currently debating legislative ideas to prevent another similar collapse.
The impact of psychological banking in the digital age is also being examined, with regulators and decision-makers investigating how social media and digital messaging may have contributed to the crash of these mid-size banks. Additionally, the rise in web3 activity and the high market capitalization of cryptocurrencies have been pointed to as causes of the collapse, as both banks had extensive connections to the industry.
Senator Elizabeth Warren expressed her displeasure with the government’s involvement in the rescue of crypto platforms, and industry sources suggest that buyers of Signature Bank may be asked to divest in crypto verticals. As Yellen stated, “Our banking system remains sound and Americans can feel confident that their deposits will be there when they need them.”
As the banking situation in the US remains uncertain, it is possible that more individuals and businesses will turn to the crypto sector for financial security. However, the recent failures have highlighted the need for caution and regulation within the industry. Meanwhile, large US institutions, including JPMorgan Chase & Co, Citigroup Inc, Bank of America Corp, and Goldman Sachs, intervened to save First Republic Bank with $30 billion in funding after its shares tumbled through the week.